Daily Archives: Nov 21, 2011

When is austerity not austerity? When the country in question is Argentina.

The government has long described inflation, for example – a phenomenon now running at 23 per cent according to private economists, who the government has fined for misinformation – as mere “price tensions”. Read more

You would hardly call it a vote of confidence. On the day that Vallares – the investment vehicle set up Tony Hayward and Nathaniel Rothschild – completed its acquisition of Genel Energy, its shares slumped by as much as 104p before recovering to close down 83p, or 8.3 per cent, at 912p.

Reuters is reporting that the Egyptian cabinet has submitted its resignation to the ruling council which is considering whether to accept it. The news comes as violence escalates in Tahir Square where protesters are demonstrating against what they see as an attempt by the army to retain power over whatever government emerges from elections planned for November 28.

Sri Lanka announced a shock 3 per cent currency devaluation on Monday in an attempt to boost export competitiveness and keep the country’s paymasters at the International Monetary Fund happy.

Mahinda Rajapaksa, who is both president and finance minister, made the announcement to parliament while presenting the 2012 budget. His speech – interrupted when ruling party politicians attacked protesting opposition members – included a projected 14.15 per cent increase in spending and a narrowing budget deficit based on increased revenues. Read more

Mike Grant, the newly appointed chief restructuring officer of Al Jaber Group, an Abu Dhabi-based family company in talks to resolve more than $1bn in debt, won’t get an easy ride.

Nearly a year since it first announced a restructuring, the company has yet to reach even a standstill agreement with creditors, often the first step in a debt work-out process. “He’s going to come in all guns blazing and then be slapped down,” a person familiar with the company told beyondbrics. Read more

Five months ago president DmitryMedvedev announced that the government would be redoubling its privatisation programme, relinquishing controlling stakes in giants including Rosneft and Russian Railways, and completing the sales on an accelerated timetable.

But doubts are growing about whether Medvedev’s vision – one of the few hallmarks of his presidency – will actually come to fruition. Read more

European banks account for the great bulk of cross-border lending to emerging economies so if they’re cutting back their loans because of the eurozone crisis this spells trouble for the developing world. Right?

Wrong, actually, says Jonathan Anderson of UBS, challenging a widely-held view. Outside central and eastern Europe, EMs are less dependent on eurozone banks than is commonly believed. And even in CEE, the picture may not be totally bleak. Read more

Egypt erupted into deadly protest this weekend and investors are feeling nervous as uncertainty grips the country once again. Egypt’s headline equities index had fallen 2.7 per cent by early afternoon trading on Monday and the cost of insuring Egyptian sovereign debt against default for five years had surged 60 basis points to its highest since early 2009. Read more

Taiwanese banks have started to trigger “market disruption clauses” on syndicated loans to Asian companies, the latest sign of how the eurozone debt crisis is sending shockwaves through emerging markets. Read more

Monday’s top picks from the beyondbrics team: Lex on the scramble for oil in Kurdistan and Hungary’s on/off relationship with the IMF; the divide between China’s poverty at home and wealth abroad; and Lionel Barber asks whether America’s re-engagement in the Pacific in November 2011 marked the moment when tensions with China, the superpower-in-waiting, escalated irreversibly.Read more

A market of more than 70m people where economic growth outstripped 10 per cent for the first half of the year. An energy import bill of some $50bn a year, accounting for two thirds of the country’s current account deficit. An emphasis by the government on energy sector privatisation as a means of delivering economic reform.

In normal circumstances, one would expect such a set of ingredients to produce a rush of international capital into the energy sector. But Turkey – says General Electric, no less – is a bit different. Read more

Pearson, the international education and media group, announced on Monday that it has agreed to acquire Global Education and Technology Group, a provider of test preparation services for students in China who are learning English, for $155m. Read more

But it does seem that one of the things China most wants is for the yuan to be included in the basket of currencies that make up IMF’s Special Drawing Right (SDR), alongside the dollar, the euro, the yen and the pound. Read more

Agriculture already accounts for at least 15 per cent of Indonesia’s GDP, employs nearly 43 per cent of the country’s available labour force and generates annual trade flows of $44.5bn but it is still relatively undeveloped, lacking value-adding industries. Agri-businesses take note. Read more